'This Week' Transcript: Treasury Secretary Timothy Geithner

TAPPER: The latest jobs numbers are disappointing in a lot of
ways. Larry Summers was on this broadcast in December and he said that the
economy would be creating jobs by the spring. Do you still believe that
to be true?

GEITHNER: Absolutely. But remember where we were a year ago. You
know, you had an economy that was shrinking at an annual rate of 6
percent. Three-quarters of a million Americans were losing their jobs
every month. And the president acted with enormous force and care to
get this economy growing again.

And the economy is now growing again. So we're seeing some
encouraging signs of healing. This is going to take a while, and it's
going to be uneven. But there's encouraging signs in this report.
The unemployment came down modestly and created jobs back in November.

And our job, our responsibility is to make sure we're working very
hard to reinforce this recovery. And we're seeing this growth that has
just been established translate into more jobs.

TAPPER: How possible is it that we're going to have a double dip
recession?

GEITHNER: I think we -- we have much, much lower risk of that today
than at any time over the last 12 months or so. Again just think of
where we are. We are in an economy that was growing at the rate of
almost 6 percent of GDP in the fourth quarter of last year. The most
rapid rate in six years. So we are beginning the process of healing.

And we have the capacity as a government to try to make sure we
are reinforcing that process. And we help guide this economy back to
the point where we're not just growing again, but we've seen growth
translate into jobs. And that we're reaching the lives of all Americans.

TAPPER: I think a lot of Americans wonder if you're doing enough.
There was a more than $800 billion stimulus package. They're talking
now on the Hill about a more than $100 billion jobs package. But still,
if you look at the budget that you guys introduced, you're still
projecting 10 percent unemployment this year, more than 9 percent next
year, more than 8 percent next year.

I realize that's going in the right direction, but it's still a
staggeringly high number of unemployed. Are you doing enough?

GEITHNER: We need to -- we have more work to do, absolutely we have
more work to do. And you heard the president at the State of the Union
say, we want to work with the Congress now to try to make sure we are
creating incentives to create more jobs, we're encouraging business
investment, we're putting resources into infrastructure, we're giving
help to state and local governments.

And it is very important people understand that we have more work to
do and we can afford that, it's important to it, our basic priority still
is to make sure that this growth we're seeing now, which is very
encouraging, translates into more jobs more quickly.

TAPPER: The new senator from Massachusetts, Scott Brown, one of the
first things he said after being sworn in was that the stimulus package
has not created one job.

BROWN:"The last stimulus bill didn't create one new job. And in
some states, the money that was actually released hasn't even been used yet."

GEITHNER: Oh, I don't think there's any basis for that
judgment. I mean, again, just think where we were. January of 2009,
three-quarters of a million Americans losing their jobs. We have an
economy now that's growing again. With growth you're going to see jobs
created.

Again, we already saw some job -- a month where we had positive job
growth. But, you know, it's going to take a while. It took a long time
for these problems to develop. They're going to take some time to
heal. But we're in a much stronger position today.

But our priority has to be, and I think you see broad recognition of
this now, is to make sure we're working very hard to make sure that
we're seeing this growth translate into more jobs to reach more
Americans.

TAPPER: Some critics wonder how hard you're working when they look
at, for instance, last March. You and the president introduced a
program to shore up $15 billion in loans for small businesses. And
according to the special inspector general for TARP, Neil Barofsky, no
details for that plan have come out, none of that money has been
disbursed, that's last March, it's the 7A program.

Have there been programs that you've introduced that just have not
worked?

GEITHNER: Look, the programs that the president supported in the
Recovery Act were very, very effective. You saw small -- lending by the
Small Business Administration increase by more than 70 percent -- 75
percent from the lows. And we have been very effective at trying to
make sure we're opening up the broader credit markets to companies
around the world.

Again, remember where we were in January of last year. You know, if
you were a company, large or small, if you were a family trying to
borrow to buy a house or borrow to buy a car or put your kids in
college, or you were a municipal government, you did not know whether
you were going to be able to get a loan.

So it is tougher out -- it is tough out there still, but we have
made dramatic progress in trying to make sure we bring stability to this
financial system at much, much lower cost than anybody anticipated.

You know, again, last February, people thought it was going to cost
maybe half a trillion dollars to put out this financial fire, and by
getting private capital to come in and replace our investments, by
allowing to bring those investments back out of the banking system,
we've saved the taxpayer lots of money, and we have resources now we
can use to try to make sure we're working very hard to meet our -- you
know the many other challenges we face as a country.

TAPPER: Isn't the problem though not so much that the credit is not
available, but that the businesses are not taking out the loans because
nobody is buying anything?

GEITHNER: Well, again, you know, we had a huge shock to the
American economy. And you're still living with the aftermath -- the
aftershocks of that basic trauma. So businesses were very, very
cautious. But if you look at what's happening today across the country,
you're seeing again the first signs now of businesses starting to take
some risk again, starting to invest again, and starting to add jobs back
again.

But, you know, our job is to make sure we're working to reinforce
that process.

TAPPER: The Congress just voted to raise the debt ceiling to more
than $14 trillion dollars. Moody's, the bond rater, just said, quote, "unless
further measures are taken to reduce the budget deficit further or the
economy rebounds more vigorously than expected, the federal financial
picture for the next decade will at some point put pressure on the
triple-A government bond rating.

Is the United States going to lose its triple-A government bond
rating? And what happens when the credit markets are no longer willing
to buy U.S. debt?

GEITHNER: Absolutely not. And that will never happen to this
country. And again, if you step back and look at what has happened
throughout this crisis, when people were most worried about the
stability of the world, they still found safety in Treasuries and the
dollar. You're still seeing that every time. People are reminded again
about the many challenges you see around the world.

That is a very, very important sign of basic confidence in our
capacity as a country to work together to fix these problems. We've
done it in the past. We -- this is within our capacity to do. And the
best way to get there is going to make sure that this economy is growing
again. That translates into more jobs that reach more Americans.

That's the only path to try to make sure that we're able to turn to
-- fix our long-term fiscal problems.

TAPPER: Do you think the budget that the administration just
introduced takes enough serious measures to reduce the debt? I see that
there is some tinkering here with spending freeze, some tax increases,
letting the Bush tax cuts expire for the wealthiest Americans. But do
you think it's a serious attempt?

GEITHNER: Absolutely. Again, look what the president proposed.
The president proposed to cap non-security discretionary spending.

TAPPER: That's only one-eighth of the budget.

GEITHNER: No, but that's a very important thing to do. And that
requires -- you know, we have some very tough choices to make, and we
outline in that budget some things that are going to be very unpopular
and hard for people to make people understand or recognize we have some
tough choices to make.

We work with Congress and the House passed yesterday the restoration
of basic disciplines in budgeting that all Americans live with so that...

TAPPER: Pay-go...

(CROSSTALK)

GEITHNER: ... we have to make sure we pay for new programs. You're
seeing, again, across the political spectrum now a basic recognition
that deficits matter. Very good for people to understand, again, that
deficits matter. That tax cuts aren't free. Got to pay for our
programs. And we've proposed in the budget some important steps to
restore some basic fairness to our tax code and begin the process of
bringing down those deficits.

And again, the president's budget proposes to bring the deficit down
from its current levels very, very sharply to below 4 percent of GDP
over the next four years or so. And we want to work with Congress to
set up a bipartisan commission to try to make sure that we're going
beyond that to address our long-term problems.

TAPPER: Do you think the fact that you guys are pushing the
bipartisan commission is indicative of the fact that our political
system is not capable of taking on the serious challenges our nation
faces?

You and I know that the money, as Willie Sutton says, said, that -- why do
you rob banks? Because that's where the money is. The money is in
entitlement programs: Medicare, Medicaid, Social Security, things that
you do not touch in this budget.

The fact that you need a bipartisan commission to recommend cuts or
tax increases, doesn't that indicate that our political system is
incapable of making these tough decisions?

GEITHNER: Jake, I am very confident in our ability as a country to
bring people together and make sure we are solving these challenges and
these problems. We've done it in the past, it is completely within our
capacity to do as a country.

But of course, it requires you bringing people together across the
aisle to step back from politics, to try to bring practical solutions to
things that are very important to our future as a country. And the
president is committed to do that.

We're going to give the Republican Party the chance to
share in the responsibility and the burden and the privilege of trying
to fix the things that were broken in this country.

TAPPER: Republicans are afraid this is just a back door for tax
increases. Are you willing to say that tax increases are off the table
for this commission? Let's sit down and talk about the long-term
structural problems with entitlement spending?

GEITHNER: The president's view, and this is a view shared by many
Republicans, and it builds on what we've seen with effective commissions
in the past, like the Greenspan commission that President Reagan
established to help restore the financial footing of Social Security, is
that for this to work, you've got to bring people together to step back
from politics, day-to-day politics, and to bring fresh ideas to solve
these kind of problems.

That's the only way to do it, we think. And we're committed to
doing that. We've got to do it on a bipartisan basis, and we're deeply
serious about doing this.

TAPPER: The president, during his State of the Union address, also
talked about a deficit of trust, the fact that Americans don't trust
government.

OBAMA:"We have to recognize that we face more than a deficit of
dollars right now; we face a deficit of trust. Deep and corrosive
doubts about how Washington works."

TAPPER: Whether it's at your -- your time as head of the New York
Fed, your time dealing with AIG, or your time as Treasury Secretary, do
you think that you bear any responsibility for that deficit of trust?

GEITHNER: Oh, I -- let me just say that I feel very proud for the
actions we took to help to stem the damage caused by this crisis. And I
feel it's a great privilege to have been able to work with this
president to move so quickly and effectively to again -- to bring an
economy that was in free fall -- a financial system at the edge of
collapse, and to begin the process of healing.

But we all recognize, and I deeply recognize that we have a lot more
work to do. And we are working very hard to make sure that the American
people understand that we're going to make sure they don't bear a penny
of loss for solving this financial crisis. Again we've brought back a
huge amount of the money that the government was forced to put in the
financial system.

And we are working very hard right now to try to make sure we put
in place strong reforms that provide basic protections to Americans
from ever again facing this kind of crisis again.

TAPPER: A year ago when you and the president introduced the
mortgage modification program…

OBAMA: "Under this plan, lenders who participate will be required to
reduce those payments to no more than 31 percent of a borrower's income.
And this will enable as many as 3 to 4 million homeowners to modify the
terms of their mortgages to avoid foreclosure."

TAPPER: If a year ago I had told you that today I'd
be sitting here, and only 66,000 Americans had permanent mortgage
modifications, would you have said at the time that that was a success?

GEITHNER: Oh, Jake, I think it's very important to recognize this
program is providing very, very substantial cash flow relief right now
to more than three quarters of a million Americans. And we -- we
believe we're still on a path to be able to reach many, many more
American households. And of course we're going to make sure that those
temporary modifications translate into permanent modifications. But
again...

(CROSSTALK)

TAPPER: But a lot of those temporary modifications were done
verbally though. They weren't done with the paperwork that a lot of...

(CROSSTALK)

GEITHNER: No. We're -- we're absolutely committed to make sure
that translates into what we said it would, which is for eligible
Americans -- they're getting permanent modifications that substantially
lower their monthly payment. Now, Jake, remember like, you know, again
for the average household that translates into hundreds and hundreds of
dollars every month for them.

That is real benefits -- great -- has greater income for them to
meet their basic needs. But again step back for a sec. In
February and March of last year house prices were falling off the
cliff. People thought house prices might fall another 20 -- 30
percent. And we've had six months now of early signs of stability in
house prices. So what that means is millions and millions of Americans
-- middle class families across the country are now seeing more
stability, and what is a basic source of financial security for all
Americans.

Those programs were enormously effective in helping again pull a
housing market that was in near collapse back to the point now where
you're seeing the signs of stability.

TAPPER: Recently the president introduced a way of
attacking the issue of banks that are too big to fail. He called it the
so-called, "Volcker rule." Some sources close to you said that you
had some concerns about that rule. What were those concerns?

GEITHNER: Oh, I am committed, and the president is committed to
make sure that the reform package Congress moves forward -- puts in
place tough, conservative, effective constraints in risk taking on the
largest institutions in the country. And I am very confident we're
going to be able to do that. This is an important part of that.

And I'm very supportive again of this basic principle. You want to
make sure that institutions that have the privilege of access to the
safety net the government provides aren't allowed to use that to
subsidize the kind of risky activity that could bring the financial
institutions to the edge of collapse.

TAPPER: And you are also concerned that you want -- you didn't want
these American firms to be unable to compete with the...

(CROSSTALK)

GEITHNER: Oh, of course. Of course. But I'm very confident we can
make sure that we are working very closely to raise global standards
around the world so we have a level playing field.

And you know we are -- we have -- we are going to have a much
stronger financial system ahead than we had going into this crisis.
Because we are going to make sure that again we're putting in place
stronger protections against risk taking. And we're going to make sure
that we work with countries around the world so that we're raising
standards globally -- not just raising the United States.

TAPPER: Lastly when you came in, and you met with President Obama,
you told them about five bombs that needed to be diffused. Fannie,
Freddie -- some others. And you recently said -- you compared your
experience to the movie, "The Hurt Locker."

GEITHNER: Oh, no. I wasn't comparing my experience. There's
nothing like what we faced to what American soldiers face every day.

(CROSSTALK)

TAPPER: Still diffusing these bombs, even if they were theoretical
economic bombs, was -- must have been very nerve racking.

GEITHNER: This was like nothing anybody in public office today, or
in the last few decades have ever faced. It was the gravest most
dangerous moment since the great depression of the United States. Again
remember we had a -- we were in a situation where people were no longer
sure they could safely keep their money in the strongest American banks.

It was catastrophic, and it translated directly into factories
closing. Millions of people losing their jobs, and their homes.
Economic -- it could be around the world came to a sudden stop. It was
the gravest moment we've ever seen. And we were very, very effective,
because of the leadership of the president, moving very quickly with
enormous care and force to bring stability.

And those policies have got this economy growing again. And as I
said we've been able to put out this financial fire at much, much lower
cost than anybody anticipated. And what that means is we have much more
resources now available to meet our long-term challenges.

TAPPER: I guess was, all I mean was,-- personally, even though I know
you don't like talking about your personal life all that much, or your
emotions all that...

(CROSSTALK)

GEITHNER: Right.

TAPPER: ... much publicly -- personally it must have been nerve
racking.

GEITHNER: Oh, it was -- it was hard. But, you know, we were all
very focused on what we could do. And you know, this -- this job --
these jobs are a little bit like the fireman. They're a little bit like
the doctor. And they're a little bit like the people that go and try to
diffuse bombs. It's a mix of those things. And I'm very proud of what
we've been able to do. But of course I understand -- I -- ever minute
with a recognition that we have a lot more work ahead of us.

TAPPER: And we're joined now by our roundtable to talk about
that interview and all the day's news. We're joined by George Will,
Peggy Noonan of the Wall Street Journal, Al Hunt of Bloomberg News,
John Podesta of the Center for American Progress, and Ruth Marcus of
the Washington Post.

Thanks so much for joining us.

George, Tim Geithner said that businesses are now starting to
borrow because they are now starting to take on risk because we're
emerging from this economic crisis. Is the economic crisis the only
reason why businesses are hesitating?

WILL: No, I think there are a number of things. It's what they
don't know and what they do know. What they don't know is what energy
is going to cost. The president says he's going to push on with cap
and trade, which would raise the cost of everything. They don't know
what the cost of health care will be. The president says he's going
to push on with health care reform.

Furthermore, they do know that their taxes are going to go up.
The expiration of the Bush tax cuts on the rich are actually tax cuts
largely on small business. Since the 1980s, the net -- almost all net
new job creation has been in small start-up companies five years old
or younger.

Furthermore, they know that interest rates eventually are going
to go up. They can't go down. They're zero now. So any increase in
interest rates is going to be adverse.

To add that to the fact that 42 cents of every dollar Washington
spends this year is borrowed, and you add that to the fact that in
2009, every penny of tax revenues was spent before an appropriations
bill was passed. That is on entitlement programs or interest rates.
That's why they're worried.

TAPPER: John, just -- I know you don't agree with everything
George said...

(LAUGHTER)

... but...

PODESTA: I don't know what George is proposing. It seems to me
that if -- the other thing we absolutely know is that if we return to
the policies that got into this mess, it's going to produce the same
result. So I think the president has to move forward with trying to
reform the health care system, which is now eating up more than 17
percent of our gross domestic product...

TAPPER: How? What's the direction on that?

PODESTA: Well, I think that he's going to press ahead to try to
get reform done either through some combination of passing the Senate-
passed health care reform bill with some fixes or perhaps a
substantial package that would reduce overall costs in the health care
system and expand coverage, but somewhat scaled-back package, but I
think he's going to try to do it this year, and I think he's going to
try to get us off of our so-called addiction -- I remember that phrase
from George W. Bush -- addiction to foreign oil and try to create an
innovative energy economy.

So there's a lot of work to do, as Tim Geithner said. They've
got to really thread the eye of a needle to create jobs in the short
term, but to deal with the long-term deficit problems that the country
faces.

MARCUS: I'm going to find one common area of agreement with
George, which is that I agree that the businesses are loathe to start
borrowing and to start creating jobs, but I disagree almost entirely
with all the reasons that George said that that exists.

It's not because of fear of higher taxes. Most of it, it's -- a
very, very small sliver of small businesses would be affected by
higher taxes.

It's not because of not knowing about health care costs or energy
costs. It's because of a fundamental concern -- which is completely
justified -- about the future path of the economy short term.

In other words -- and you can see it in the reaction that the
administration itself had to -- what seemed like good news on the
economy with the jobless rate this month. It is going to be a long
slog out of this, and it's not at all clear that it's going to be a
steady uphill climb. It may be a steady trough that inches very
slowly uphill. It may go down again before it goes up. And that's
what's holding back business.

NOONAN: I think people who might otherwise be hiring or taking
on new help or expanding are feeling nervous. I think they're feeling
nervous in part because every time the administration speaks about
economic issues, what they say doesn't sound true. It sounds like
some kind of mix between "rah-rah" and gobbledygook.

So -- so another problem I think is that the administration did
not depart from the Bush administration way of spending and spending,
and people can see it. Bush kind of broke the bank, and now Obama is
double-breaking the bank. And so people look at this and they think,
"I don't feel secure to hire someone. I can sort of feel the pressure
of bad stuff coming down the pike," so I think that's part of the
problem.
TAPPER: Al, you also have been critical of the economic message
coming from the administration. When you heard Secretary Geithner in
that interview and when you've listened to the president more
recently, has that improved at all?

HUNT: Not much. They don't have anyone that really conveys a
very coherent economic message. I don't think it is. I disagree with
Peggy and George in the sense that I think it's the policies. I -- I
do think there's a psychological problem that is huge.

A year-and-a-half ago, the global economy almost went off the
cliff. Everyone knows that, whether you're a small-business person or
you're Goldman Sachs. There is a sense that we have avoided the
cataclysm, that we're on the way back, but there's nervousness about
that.

And if we're -- if we are on the way back, we're not on the way
back very -- very rapidly. If you look at that jobs report the other
day, yeah, the headlines were pretty good. It went to single digits
for the first time in a long time. But when you dig deep in there,
there was a lot of very, very discouraging numbers there.

So I think -- I think the psychological problem is -- is -- is
really very vivid.

TAPPER: OK. We're going to have to take a quick break. But
after the break, the roundtable will be back with the politics of
national security and Sarah Palin's Tea Party speech. And, of course,
later, the Sunday funnies.

(BEGIN VIDEO CLIP)

FALLON: Let's take a moment to remember the accomplishments of
the Democrats' 60-seat supermajority.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PALIN: The administration says then there are no downsides or
upsides to treating terrorists like civilian criminal defendants, but
a lot of us would beg to differ. For example, there are questions we
would have liked this foreign terrorist to answer before he lawyered
up and invoked our U.S. constitutional right to remain silent.

(APPLAUSE)

Our U.S. constitutional rights.

(END VIDEO CLIP)

TAPPER: That's former Alaska Governor Sarah Palin speaking in
Nashville last night at the Tea Party convention, one of the many
topics we'll talk about in the roundtable.

George, let me ask you a question. Does Governor Palin have a
point there when she's talking about the failed Christmas Day bomber,
Umar Farouk Abdulmutallab, being able to invoke our constitutional
rights?

WILL: She has a point in that it seemed reflexive on the part of
the government without much thought about this. Here was someone who
came from Yemen, from Al Qaida in the Arabian Peninsula, who you would
think would have interesting things to tell us, and they instantly
Mirandized him, after, what, 50 minutes of conversation. I understand
he's still being interrogated, but he still does have a lawyer.

The point of counterterrorism is not to prosecute successfully
terrorists; it's to prevent terrorists from committing their acts in
the first place. It is prevention, not prosecution. And this looked
like just another way of saying, "We're not George Bush," which isn't
the point.

MARCUS: Well, I mean, they -- it actually might have been a way
of saying, "We are George Bush," since that's exactly what happened
with the shoe bomber.

I think that it's fairly clear that that particular incident was
not well-handled. I agree with George. It was -- there was not
enough consideration given to differing routes of dealing with it. On
the other hand, he was not instantly Mirandized. He did answer
questions for 50 minutes. From my point of view, that was not long
enough, and I think next time around there's going to be a lot more
consideration given to various routes.

At the same time, I think it's been completely over-dramatized
what rights he would have gotten in another setting. Whether or not
he's instantly Mirandized and whether or not he's interrogated is one
thing. Whether he's tried in a criminal court or in a military
commission, he's still going to be invested with all sorts of rights
that apparently Sarah Palin's not comfortable with.

HUNT: Well, but I think the problem here was that the
administration itself six months earlier set up something, the high-
value intelligence group, that was precisely for areas like this.

And the premise, which I think is anti-Bush, is that a skilled
interrogator is far more important in getting information from a
terrorist than all the waterboarding and Cheney-esque tortures in the
world. I think they're right on that, and they -- they bypassed it.
They didn't use it this time.

The second problem -- I don't think prosecutions are unimportant
here. They didn't have any prosecutorial problem here. There were 40
witnesses on that airplane. They had material evidence -- his
underwear, if you will -- so I think they botched this one up.

I agree with Ruth. I don't think it was a terrible...

(CROSSTALK)

PODESTA: Jake, the proof's in the pudding. He's talking. The
FBI has gone to Nigeria, got his parents to cooperate. They've talked
to them. He's cooperating. They've already rolled up a cell in
Malaysia, evidently, from information that he's given.

And I think that, you know, you can huff and puff, as former
Governor Palin likes to do, but the proof's in the pudding. He's
talking. They've gotten actionable intelligence. They're acting on
it. And I think that's -- we've got to...

NOONAN: But can I just -- it is weird that the U.S. government
is announcing to the world that he is talking. It is -- it is strange
that they're saying, "Abdulmutallab, he's singing like a bird. All
you people back in Yemen, all you people in Nigeria and all the places
he's been to in the past two years, realize he's giving you up. We've
turned him." That's not good for us.

PODESTA: Maybe if the -- maybe if all those politicians stopped
attacking the FBI. Mitch McConnell likened the FBI to a Larry King
interview. Maybe if they'd stop with the politics...

MARCUS: Now, that's cruel.

PODESTA: Well, no, I think he owes the FBI an apology. But if
they'd stop with the politics, maybe they wouldn't have to respond to
it.

(CROSSTALK)

TAPPER: Well, that's an interesting argument, because what
happened was on Tuesday there was an Intelligence Committee hearing.
And both FBI Director Mueller and the director of national
intelligence, Admiral Blair, said very tersely that Abdulmutallab --
that the questioning and the interrogation was still going on.

TAPPER: After that, the White House called a briefing and told
White House reporters what was going on, which was that
Abdulmutallab's family was cooperating. That decision then was
criticized, as you just criticized.

Now, what the White House says is, people were criticizing us
before. They knew Abdulmutallab was cooperating. Now they're
criticizing us for letting people know that he's cooperating. They
can't have it both ways. Is that not fair?

NOONAN: I think two facts. One is, sometimes when you hold the
executive and you are president and you work for a president, you have
to show forbearance and not answer back when it will jeopardize things
in a serious way, as I think perhaps the telling everybody that
Abdulmutallab is talking might jeopardize things.

The second thing is, yes, both parties to some extent use these
grave national security issues as a political football. People like
us always complain about it. But the fact is, at those Tuesday
hearings, everybody in American intelligence, when asked, "Do you see
the possibility of a coming attack in the next few months?" they said,
"Yes, yes, yes, and yes."

Both parties should sober up on this and seriously work together
as if they were retired people in Virginia and Maryland who used to
work in the government and know now party stuff on this issue doesn't
matter.

TAPPER: Well, Al, does the president have a responsibility --
John was saying that the politics were interjected, and he was
suggesting that the Republicans were interjecting it -- does the
administration have a higher threshold to not respond, to not let
these things on?

They say, look, we're letting the American people know that we
are doing everything we can to protect them. Is that fair? Or is it
that they're just trying to get political cover?

HUNT: I think they need to do that, Jake, without sometimes
going into the particulars. And I think they probably have said more
than they needed to say here. I doubt very much that it jeopardizes
national security. I also think that almost all those experts --
Peggy's right -- that if you talk to of either party will tell you
that there's somebody out there, some people out there who are
planning an attack.
They want to attack us. They want to attack us soon. I don't
think the handling of the Christmas bomber -- I envy you all, because
you pronounced his name better than I can -- I don't think -- I don't
think the handling of that is going to change in any way what the
likelihood is of any successful attack or not.

MARCUS: But -- but I want to go back to something that John said
and disagree with John, which is, the proof's not necessarily in the
pudding, because what if he had actionable intelligence about ongoing
plots of people in the air, of people about to be deployed?

That he's talking now is terrific. I tend to think that the
administration should have sucked it up and not answered all -- not
defended itself so much, though I completely understand the instinct
to do that.

But whether he talked a little bit, if he -- but it's not at all
clear to me that he was telling everything...

(CROSSTALK)

PODESTA: That's a -- that's a legitimate point, but they did
interrogate him before he -- they, you know, put him under to -- for
an operation to deal with his wounds. And when he came out, the FBI
has said -- I don't -- you know, the Intelligence Committee could go
into this -- the FBI has said that he's -- he decided he wasn't going
to talk anymore, and they -- at that point, they gave him his Miranda
warnings.

So that's -- it's a -- you know, it's a question of how long you
go on for. I think that's a question of judgment. Maybe you're
right. Maybe the FBI was right. I tend to listen to the
professionals. And other people tend to listen to Governor Palin.

But I think that -- to attack the FBI...

(CROSSTALK)

PODESTA: But, you know, I come back to -- to attack the FBI for
their conduct in this case as the Republican leadership has done, I
think is unconscionable.

By the end of the week, we had -- we had Senator Shelby putting a
hold on 70 nominees, including the head of the intelligence at the
Department of Homeland Security, the head of intelligence at
Department of State. I mean, what gives here? Are these people
serious or are they just playing politics?

TAPPER: Well, and then that's interesting, because all this
debate, all this partisanship comes during a period, a two-week
period, where President Obama is really hitting home the idea that
there needs to be more bipartisanship. In fact, here's the president
speaking yesterday at the Democratic National Committee's winter
retreat.

(BEGIN VIDEO CLIP)
OBAMA: I'm proud to be a Democrat. I'm proud to be a leader of
this great party. But I also know that we can't solve all of our
problems alone. So we need to extend our hands to the other side.
We've been working on them. Because if we're going to change the ways
of Washington, we're going to have to change its tone.

(END VIDEO CLIP)

TAPPER: So, Al, that speech came one day after the White House
attacked Senator Shelby for the very thing John was just talking
about. He had put blanket holds on all nominees because he was
concerned, he says, about some national security issues. What's going
on here?

HUNT: Well, first of all, Senator Shelby is totally fraudulent
on this to begin with. He was concerned about pork for his home state
of Alabama. This is as bad as the Nebraska carve-out. It's
outrageous what he did. It's, I think, an abuse of senatorial
prerogative.

But I also, Jake, think that it's nice to give speeches. We have
to have a more civil dialogue in this town. We have to have more
bipartisanship. For a whole lot of reasons, it's not going to happen.
It might selectively be able to -- you might have a few areas. You'll
have some jobs bills where Orrin Hatch and Chuck Schumer might agree.

But in a -- in a broader sense, this is -- these are divisive
political times, and that's not going to change, at least until after
the November election.

TAPPER: George, the administration and the president has said
specifically that he was hoping for some bipartisanship support for
some of the small-business tax cuts and credits he's pushing. There's
an elimination of a capital gains tax for investments in small
businesses, a tax credit for hiring, hoping for Republican support. I
have yet to hear one Republican voice, one level of support for any of
that.

If there's not bipartisan support for tax cuts, is there support
-- is there possibility for any support for anything bipartisan?

WILL: Well, I'll volunteer. I subscribe to Milton Friedman's
view that any tax cut of any shape at any time for any reason is to be
supported. So I think probably they'll get some support on this.

But he has a very aggressive agenda from which he has retreated
not one bit. I think you'd agree with that. And so when he extends
his hand, he says, "I ask only one thing of Republicans, and that is
that you quit being Republicans," and they respectfully decline.

If you have an aggressive agenda, you're going to have to push it
aggressively in a partisan manner.

NOONAN: I'd add, sometimes timing is everything. If the
president had spoken like that or acted in a manner reflective of his
comments last year, when he first became president, instead of
presenting some bills that want to actually know Republican support,
he might be in better shape now. It's very convenient for him to be
saying, "We're all in this together," when his numbers are going down.

TAPPER: You wrote recently rather approvingly of the election of
Scott Brown in Massachusetts. He has -- is that unfair?

NOONAN: Sure. No, no, good.

TAPPER: OK. OK. And -- and he came here talking a lot about
wanting to work in a bipartisan fashion. One of the first things he
did, as you saw in the interview with Geithner, we ran a clip of
Brown, was say that the stimulus bill has not created one job. Now,
you can criticize with the stimulus bill, but it is -- you can -- you
can disagree with whether or not it's created 2 million jobs, but
certainly it has created one job.

HUNT: Scott Brown's.

(LAUGHTER)

(CROSSTALK)

TAPPER: But, I mean, is -- do people just come down to
Washington and become partisan, if even Scott Brown is already saying
the stimulus bill hasn't created one job?

NOONAN: Well, Scott Brown was saying things like that on the way
to election. He is very much against the -- the president's economic
program.

I would say, look, obviously, the stimulus bill must have created
at least one job, but when you try to find out where are the jobs, how
many, what has this bill done, you know, you can't really get an
answer. It sort of all dissolves in gobbledygook. You never know. I
can't imagine Mr. Geithner knows how many jobs it's created.

WILL: It has -- it has increased federal civilian employment
dramatically, and it has preserved unionized public employee jobs in
the state and local governments.

TAPPER: John, is there any hope for bipartisan work in this
Congress this election year?

PODESTA: Well, you know, you have to kind of turn over a lot of
rocks to try to find some possibility of that. I think the one place
where you still might be able to find bipartisan work is the efforts
that Lindsey Graham and John Kerry and -- and Joe Lieberman are
undertaking to try to find out whether they can do a comprehensive
energy and climate bill that would actually create an energy
revolution in this country.

Senator Graham has stuck his neck out. He's working hard at it.
And, you know, I'm still hopeful that we can find some bipartisan
support on a bill that the president could -- could sign.

TAPPER: Bipartisan seems to be the word of the day. Sarah Palin
talked a lot about there needing to be bipartisan work last night in
her speech, even though she was definitely pushing a rather
conservative Tea Party agenda. What did you think of her speech,
Peggy?

NOONAN: Hmm. I'll tell you, it's almost odd what struck me.
The Tea Party movement itself has to decide if it is a movement, in
which case it will probably become part of a broad Republican
coalition, or if it is going to be a third party.

It was interesting to me that Palin continually called it a
movement and didn't refer to any third-party ambitions. If it's going
to be a movement, it's good news for the Republicans. If it were
going to be a third-party thing, it would be bad news for the
Republicans, very good for the Democrats.

MARCUS: I'm not really sure that having it be a movement that's
part of the Republican Party would be good news for the Republicans.
It would -- Sarah Palin talked last night about how it was a great
thing for the Republicans to have robust and divisive primaries, and I
would think John here would say, "Yes, excellent. Let's go to it,
and, in fact, have those robust and divisive primaries and pick the
Tea Party candidate, because running against a Tea Party candidate is
going to be a lot easier for whatever Democratic candidate there is
than running against some kind of consensus centrist-esque Republican
candidate."

NOONAN: But at the end of the day, this is a big movement. It's
the most respected party, I think, in the polls now. It leads before
Republicans and before Democrats...

(CROSSTALK)

NOONAN: ... but when these folks vote, they're not going to be
voting Democratic. They're going to be voting Republican at the end
of the day.

PODESTA: I think the only thing that's certain is that it's good
news for Republican consultants, because there seems to be a lot of
profiteering done now (inaudible) the Tea Party movement, as was
evidenced, I think, in Nashville this week.

But I think that, so far, we've seen -- I think, actually, in the
end of the day, it's going to be a problem for the Republican Party.
And -- and I think Governor Palin could be a problem for the
Republican Party. This week, Wall Street Journal reported that John
Boehner and Eric Cantor were meeting with bankers from Wall Street
saying, "Why -- why aren't you giving us more money? We're opposing
financial regulatory reform. We're opposing putting caps on your
bonuses."

Sarah Palin won't stand for that. The Tea Party movement won't
stand for that. And I think when that clash happens, I think the
Republican leaders in -- in Congress, I think, are going to pay a
price for it.

(CROSSTALK)

HUNT: The Tea Party movement will clearly help Republicans this
year, because they're an insurgent party this year. They create
energy out there. They don't -- they don't have litmus tests of Scott
Brown or Mark Kirk or anyone like that.
However, I'm not sure exactly what the Tea Party movement is. I
don't think the polls -- the people who respond to the polls -- know
what it is. And it remains to be seen whether it will be an asset to
the Republican Party once you get beyond this insurgency year.

TAPPER: One thing -- and speaking of difficult Republican
primaries, there is a difficult Republican primary, very contested, in
California right now. A former Hewlett-Packard CEO, Carly Fiorina, is
running this ad running for the Senate for the Republican nomination
against former Republican Congressman Tom Campbell. Take a look.

(BEGIN VIDEO CLIP)

(UNKNOWN): Is he what he tells us? Or is what he's become over
the years, a FCINO, fiscal conservative in name only, a wolf in
sheep's clothing? The man who literally helped...

(END VIDEO CLIP)

TAPPER: There you go, the demon sheep ads. George, aside from
the -- the fact that that demon sheep now haunts me at night, I'm
wondering if you could comment on the fact that Republicans are now
running to the right for this mantle of fiscal conservative.
Certainly that's something we see in the Tea Party movement. We're
seeing it now in California, as well.

WILL: Sure, because California has a closed primary.
Republicans will vote in it. And about 15 percent of the decline to
states will vote in it. That's -- Fiorina running an ad against Tom
Campbell, who was running for governor until enticed back into the
Senate race, I think by Meg Whitman, who's running for governor and
really doesn't want two former Silicon Valley CEOs running in tandem
on the ticket, Meg Whitman coming from eBay, Carly Fiorina from
Hewlett-Packard.

That said, it's the dog that didn't bark there. There's another
candidate there, and he's Chuck DeVore. He's the conservative in the
race. And I'll make you a small wager that he is the Republican
nominee, neither of those two.

TAPPER: Do you want to get in on that action?

NOONAN: That -- I've watched that thing three times. It is --
I'm fascinated by it. It is less like a political advertisement than
it is like a nervous breakdown. It is crazy. Its text doesn't follow
its art, if that's what it would be called. It's like -- it's like an
answer to the question, what would happen if Salvador Dali made a tech
(ph) commercial?

TAPPER: You don't -- you don't like the demon sheep? You're not
a fan of the demon sheep?

NOONAN: I kind of love it.

MARCUS: More livestock in political ads is what we need. Can we
say something about the -- the Republican lurch to claim the mantle of
fiscal conservatism?

TAPPER: Very quickly, yes.

MARCUS: Give me a break, OK? There is a serious proposal out
there, first for a statutory commission, now for an executive order
commission to tackle this, to put everything on the table, and
Republicans have balked.

TAPPER: All right, and we're going to have to leave it there.
The roundtable will continue in the green room on abcnews.com, and you
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